tv Bloomberg West Bloomberg July 6, 2014 7:00am-8:01am EDT
>> live from pier three in san francisco, welcome to "bloomberg west." we focus on technology, innovation, and the future of business. every weekend we will bring you the best of west, the top interviews with power players in global technology and media companies that are reshaping our world. for the second time in less than a month, there is a major shakeup in the twitter executive ranks as the company tries to boost user engagement. his time twitter has named a former goldman sachs banker
the new cfo. as he led the twitter ipo and has a varied background, including cfo of the nfl. he is also a west point graduate, spending time in the middle east while in the army. gupta will stay on as senior vice president of strategic investment. this is less than three weeks after the coo resigned amid reports a power struggle between himself and the ceo p meantime, twitter is also active on the acquisition front, reaching a deal to buy the mobile ad targeting firm for $100 million at what do these moves say about twitter's future? i spoke to a partner at red point ventures he was previously twitter director of platforms or four years. i asked about this" i have heard amazing things about anthony. i know they had a great experience working to the public process. there were a lot of fans inside of twitter.
i think about what it means for twitter. i think bringing someone in like anthony to help translate between the two worlds will be very effective for them. >> there are a lot of executive moves happening. the head of engineering left her they have had a lot of shakeups in the products department. what is going on? >> it is about finding the right leaders at the right time to grow and continue to expand the opportunities they have to do with around 300 million active users, i think that could because two one billion. they have to find the right people help them to get to the spot. >> how is dick costolo regarded in the company? >> i think he is an amazing ceo. i love working with him. people are inspired by him. >> from a culture perspective, is there anything to worry about? >> every company has its challenges and growing pains.
twitter has thousands of employees and is now a public company. there will be some growing pains, but i think it is healthy and growing like crazy. >> why are they buying this acquisition? >> twitter is doubling down on mobile advertising it we see tons of ad dollars shipping into mobile. we see tons of companies being billed mobile only. to keep doubling down on mobile advertising is very smart. it is some the gulf region targeting. there were companies trying to get in stalls and bring new users, but now they will have audiences, and they can build advertising products to bring people back. if you want to buy something or you use ebay, ebay can target an existing user with a product they want to buy the time they ant to buy it. >> not long ago, twitter hired ahead of commerce, but nobody
really knew what exactly twitter was planning to do in commerce. do you have a better idea or they are going with this? >> there was a little bit of news leaking out today. the ceo is a total rockstar. i think he is the right guy to lead and figure out what commerce is per at if you think about the evolution of how twitter is built out him of their building stuff in stream. they're consuming something. they are putting a "buy now" button right next to products or click's you think they will do that? >> that is my guess. >> how is this going to help user growth? >> the thing that is most important is building more use cases so people understand how to use twitter. the more way they can get twitter out outside of those active users means a lot to them. if you think about the global reach, people are undercounting the reach that twitter has.
>> one of the things dick costolo said to me is a does not matter how many people are ctually using twitter, because you see tweets everywhere, on tv and in magazines done is that true or do they really need people to be signing up? >> i think that is where the public market misunderstands twitter. it is not like facebook. it is not just about the monthly ctive. it is about the one billion plus users they can reach on a monthly basis. it is media. it is such a part of the culture now. in many ways it is bigger than facebook or do you hear about it more on a daily basis than you do about facebook. i think there is a huge opportunity. >> you have been at red point now for a year? >> not a year yet. >> almost a year. how is it going? what trends are you following? how has your twitter experience help you pick and choose where o place your bets?
>> i am loving it. it is a big change from operating. there is a lot to learn still. good thing i am learning from twitter is looking at user behavior and continuing to motivate people to use the application. what will get people to log back into your application pier you look at the behavior for twitter, it is the thing that people open up every day to see new real-time information. my job is to look at those things and figure out which ones will be the next twitter. >> so which businesses are looking cool or like they will keep people coming back and opening the app every day? >> yes, that repeating behavior. it looks like, place behavior, like somebody taking public transportation. > how are you guys being affected by valuations and what
is happening with -- you mentioned uber, and what is happening in the broader environment -- are these valuations trickling down? >> it had been fluctuating for a while. i think enterprise has stated little bit higher the consumer has probably been a little depressed. it affects the valuations in the early stage. it is import and for us to still try to find the winners in those markets, because those winners can have outside values. >> that was a partner at redpoint ventures, former director of platform at twitter p or tech investors want to find in a big disruptive technology, but what happens when legal challenges like what happened to aereo that these new companies n the defensive? we talked to a top investor about the pros and cons of investing in disruptive tech, next on "the best of bloomberg west." ♪
after the supreme court ruled that the area business finally it's the rights of broadcast networks, they have suspended operations. in a blog post, the ceo called the ruling a massive step back for consumers. e says the journey is not done and aereo is busy mapping out its next step. how do investors know when a disruptive tech committee will be a huge success or when they might lose it to government egulation? we spoke to a venture capitalist who has weighed these risks over the last decade to started by asking how he makes a decision to invest in companies with regulatory concerns. >> you think about commercial drone, as well, so everyone chooses the market they are going to either create or disrupt. when you disrupt, you have things to deal with it when it comes to aereo, they must have chosen to go after the cable providers thinking that there was a shot. personally, we would not have taken that bet because they're
very litigious. that is what happens good with commercial drones, we made that that. we have a service which is sort of like uber, except it is the driver, not the car, that is available to you do have to figure out the risks. you have to hope that the regulatory one will be addressed at some point in your favor. >> is the notion that there are ertain of different types of industries, things like federal, finance, health care, obviously, communications with aereo, that that is federal income and spot checking -- protecting themselves? with municipalities, they're dealing with a lot of regulations as well, but they can't take them one day at a time. >> i would go after the local ones, even though you have to tackle them one after the other. the federal ones are always more
challenging. we hope that progress will actually win eventually. >> hope is not a plan. >> i know. look, there is a lot of luck because into this, especially in the early stage. in the case of regulation, you talk to your counsel and they say, look, this is sort of what has happened in the past, sort of the way the agency is looking at those kinds of things, and you hope for the best. >> we have talked about evaluations. uber at $17 billion. do you think these issues could truly slow them down, become their fatal flaw? >> i do not think so. in the case of these two companies, they have reached a scale where they can actually go to the local government. they can go to institutions to make their case. in the case of aereo, they were just too small and they had not made a dent in the marketer they were slaughtered by the cable ndustry. >> airbnb, where regulatory concerns the reason why you passed on it?
>> when i was looking at that, it was called air bed and breakfast. you could go stay with someone to make it cheaper. i thought, yeah, right. >> you are not the only one. >> when uber -- >> them, too. >> when they got their valuation, you could feel the funk in the ecosystem where everyone who passed on it was like -- >> what is that feeling like when you know you have passed on something that you could have made so much money on? > that is our job. our job is to see everything that is sort of interesting and then make a decision. hopefully we will make the right decisions and make money for the ext one.
in the case of linkedin, uber, and airbnb -- the thing is, airbnb and uber are on paper. linkedin is real. >> you just raised more money to have been talking about valuations and how money rushing into the market is driving up valuations. you are trying to raise money, but it is not rushing in yet but you actually raised a lot of money or commitments to money. what was the fundraising process like? how are the rest of the world investors seeing early-stage investing? >> despite the lows that exist today in the market where you have literally 135 funds that are out there investing -- when i started, there was one. it is a different landscape. people look at the brand is built. the portfolio is with 150 companies spirit we have
actually made quite a bit of progress, and we have a lot of winners in what we have invested, which will make a lot of money for investors. so we look at the brand was billed, and we say, yes, we want to be in that court. >> it does not end well, he said to do you think this will end well, the capital chasing deals right now and the prices going up? >> you have a lot of capital-chasing deals. people will lose a lot of money. but i think that there is a lot more discipline, and prices have sort of gone up and sometimes in crazy ways. but if you look of the market, there is just a finite amount going in, and that is worthy regulation is happening. even though some companies get high valuations, the mean
>> welcome back. legislation to kill patton control died on the senate floor this spring, so the patent rolls live on for now. but the u.s. trademark office is not giving up its fight to reform the patent system. what is a patent troll and why are they causing such edits for technology companies? cory johnson has the answer. >> they are called patent trolls, committees who acquired the rights to a patent but do not have to sell or produce anything. hey build patent arsenals,
often collected from abandoned stockpiles of universities, failed startups, and defunct big tech companies be at once they build their war chest, those trolls go out for blood, targeting committees whose technologies are similar to those outlined in the patents. they threaten costly lawsuits unless licensing fees are paid up in most troll attacks are settled out of court through nondisclosure agreements. in fact, of the 4700 patent laws filed since 2012, 3000 were from these so-called hand trolls. >> cory johnson also spoke about ways to fight heightened trolls with the deputy director of the u.s. patent and trademark ffice. he started by asking her what she sees as the fun a mental problem with patent trolls. >> that is a pretty complicated question. the biggest question to ask is -- what can we all do to better improve the patent system, to make it the best it can be? here are lots of initiatives being undertaken. they are being undertaken by the
court, the congress, and by the administration, by the u.s. trademark office. happy to go into those in as much detail as you would like. > you have worked in silicon valley, worked with lawyers, worked on the apple-microsoft case which was very important. how do you sort of explain how different things are now banned they were even 10 or 15 years ago? like i think our companies are just as innovative as they have always been. ut studies have been done, and there has been an uptick in patent litigation and abuses litigation to the goal of the administration is to help curtail the patent litigation and create a system that promotes and encourages innovation.
>> what kind of litigation is being abused? >> starting a patent when you have no ownership rights. stretching the meaning of what it covers. using a tactic where you send demand letters to a lot of folks and you are saying to not look too much into the details of it and you can settle this litigation for just $3000 to my lot less than hiring a awyer. >> what has to change? >> the offices undertaken a huge priority to increase the quality of hand issues. the less ambiguous the patent is, the less the likelihood of that patent being used in litigation. the more likely the companies are able to focus on innovation. quite how do you make the patents better? is it a matter of coaching your people so they can do better? > they are already doing a tremendous amount. the examiners are very hard-working and do an excellent job searching. however, we are actually using silicon valley techniques, such as crowdsourcing, now. we're going up and asking experts to say, look, you are experts in your field, so what should our examiner be considering as they are determining whether or not the patent should be issued? e are also bringing in experts
rom the industry, from academia. we have some of the best experts in the world that sit outside the walls of the pto. we say come on in, come to the office, give a one hour resentation on semiconductor technology, whatever the xpertise is, get that training to our examiners and we will broadcast into all of our examiners. smart examiners are up to speed on fast-moving technologies lead to better quality patents. >> what about innovation? >> there are many factors. the key is that what we want is we want to curtail patent litigation, but we also want to preserve the rights of legitimate patent owners be to have a balanced set of reforms that promote innovation, there are a lot of issues at stake.
that said, the administration has stalled, but we're not waiting to move forward to it we have a number of initiatives under way. we had the crowdsourcing initiative to it we are tapping into experts in the field. we're also using data that so many of our companies use. the uspto has a lot of data. for the first time, we're able to go over that data, review that data, and see how the examiners reviewed the patents at every phase of the examination. >> there was a time when patents were not seen as such an incredible, obvious challenge. president obama actually mentioning it in the state of the union. that highlighted -- take a listen. >> let's pass a patent reform bill that allows our businesses to stay focused on innovation, not costly and need this litigation. >> it is kind of amazing how relevant this issue is. i wonder if the 20 have in your timeframe of patents needs to change now because innovations happen so quickly.
>> that is true. but you have to keep in mind that there are many industries for which a 20 have in your term is justified and needed. for example, lot of the biotech and pharmaceutical companies are they put hundreds of millions of dollars invested into developing and getting fda approval for new drug. to recoup their investment, they need longer-term protection. >> longer than 20? >> well, 20 is probably long enough to her they seem to be operating just fine with that amount of time. you do need a certain amount of time of exclusivity so that people take the risks so they can then also have the opportunity to recruit for investment. >> cory johnson with the u.s. patent office deputy director. our testers gathered outside the office of facebook in london as the committee faces scrutiny for ads it ran promoting the reelection of syrian president bashar al-assad. a group is demanding the social network give back or donate money made from running those ads. ♪
>> you're watching the best of bloomberg west where we focus on innovation, technology, and the future of business. facebook is under scrutiny for ads promoting the reelection of syrian president bashar al-assad at according to facebook, the ads ran for a few days last month before it was taken down. in response, the syria campaign staged a protest at the facebook london office, demanding facebook return or donate the proceeds it got for running the pro-assad at the cory johnson poke with the syria campaign director and asked how the protest went. >> it was good. there is strong support from the public. there were even people in the offices and in the facebook holding who are opening windows
and showing a thumbs up. people are so pathetic to the question that we are asking facebook, which is if you have done business that promotes such a terrible regime, the thing you should be doing is making it right. by making it right, we mean give the money, the profit you have made, to promote an atrocious regime like this, give that back to the people it belongs to, which are syrians investment need of medical assistance and food. there are lots of aid agencies that can provide assistance with that money. >> we asked facebook about this, and they said they took the ad down. they said they do not really know who paid for the add in the first place. the money did not come from syria, so they cannot feel like they were breaking any laws. >> well, you know, anyone who knows a little bit about this regime knows that it's tentacles spread far and wide in the
region and beyond the region, which is why so many syrians, whether they live in paris, new york, or london still cannot speak out against the regime. it is not going to be a philanthropist who decides that they want to buy facebook back to promote assad regime on facebook. it is going to be an element of the syrian regime. i think it is disingenuous for facebook to suggest that the money does not come from an element of the regime. >> it is fairly amazing that this got the thumbs up outside of their office, the visual like, but it is amazing to me that it has 200,000 likes. >> propaganda matters when it is a crisis and conflict of this scale. for many ordinary syrians, they believe the world has forgotten about them and about what is happening in syria.
the idea that facebook can do business that promotes a regime that has besieged cities, used starvation as a lesson of war, dropped from on schools and hospitals, instantly say, well, we took the ads down that we are keeping the prophet, we think this is an opportunity for syrians and say we have not forgotten what is happening in your country, and this is a negative business. there is a very simple way of putting this right. >> what does this tell us about the assad regime and if they were behind it? what does this tell us about them and their use of technology at this time of international condemnation of assad and the syrian leadership? >> this is being done at the time of the sham election, which assad was running in the country. it was an attempt to legitimize the regime and the election. what is interesting is if you look at the reporting on syria t the moment, the world is
talking about isis and iraq. the assad regime is responsible for the majority of things that have unraveled in syria over the last three years. isis were advertising on facebook, there would be uproar, and rightly so. we're just astonished that there is not more uproar that assad has been able to advertise and facebook take the money, make a profit, and hold on to it. >> the syrian campaign director john jackson with my partner cory johnson. google will have to face a class action lawsuit over its street view data collection come of this after the supreme court refused to consider google' is appeal of a lower court's ruling allowing privacy lawsuits to go forward. the plaintiff accused google of collecting e-mail, passwords, and usernames while shooting images for street use. google has apologized and said it was a mistake but insists the actions did not violate federal wiretapping law. cory johnson and i spoke with
marc rotenberg. i started by asking how bad the ituation is. >> i think it is a serious decision for google. ssentially the supreme court left in place the decision which found that the company had violated the federal wiretap act. the street view vehicles that were supposed to be taking pictures of houses were also capturing wi-fi communications. when people learned about that, they charged that the come but he was violating federal wiretap laws. >> what exactly is it google doing here? some of the things it sounds like they were collecting sounds ominous, e-mails, passwords, images, documents, all
unencrypted. >> and they would have cars patrolling the streets, not just in the u.s. but over the world. they were taking pictures of everything around them, everyone walking, everyone's homes, and there were also secretly gathering wi-fi hotspots. not just the location but the actual ip addresses. they wanted to know exactly what computer you are using and what your home router ip address number was and where it was in the home. in some cases they were able to determine usernames of the actual devices, so courts on both sides of the atlantic have declared this act to be illegal. >> they said it was a mistake or does that mean it was an accident? >> they do not say what -- it was an accident. there have been so many instances where google has been involved in gathering information and sharing that information with the world. think of the original mission statement. every google employee and every google person since the beginning of the company has
been on a mission, and that was clearly defined, together the world's information and make it universally successful. if somebody as information, you might not want to share that personal information. if the business statement is to got a do this thing, they will run into these problems and they may have to address them. >> a lower court will hear this class action suit, so what are the actual consequences? what punishment could google face? >> it could be quite substantially the action brought under the federal wiretap act was a class action lawsuit which means that many people have been brought together to bring this claim. the supreme court has left in place the legal basis for the claim, which means google could be looking at very substantial
monetary fines. it is unlikely they will go to trial in a case like this. the facts are not favorable for them. it would be easy for the plaintiffs to show that the wiretapping activity that was alleged had, in fact, occurred, and there was a legal basis in place, so they would most certainly prevail in trial. so you will likely see a settlement to the parties will sit down and try to figure out what a reasonable amount is to dispose of the claims pending against the company. >> when you look at all the acquisitions google has done over the last six months, acquiring satellites that can end signals, find people, do those kinds of things, drones him a military robots, home sensors, dropcam. does this result in the supreme ourt making those acquisitions perhaps less valuable or make them not be able to use them in other ways? >> i think the decision is a good reminder that there are actually some boundary lines go
there for google that they really cannot cross. a lot of the data collection is internal. but when they are violating the wiretap act like collecting information through wire transmission, then they are clearly creating a business model that is going to subject them to liability. i think it is going to cause the company probably to pull back a little bit, look a little bit more closely at limitations. from the user's perspective, that is not necessarily a bad thing. presumably those laws protect it in court. we do want to be able to use our wi-fi routers in our homes without worrying that others will be intercepting our private communications. at the same time, i think companies should be free to nnovate. so we will have to find ways to allow companies such as google to continue to innovate while respecting these important privacy safeguards.
>> welcome back. i am emily chang. most people consume content on their ipad. there is a new app trying to help consumers create content for the ipad. storehouse is a visual storytelling app apt for the ipad, one of nine apps the won the design award last month that race $7 million in a funding round. i spoke with the ceo and cofounder, mark kawano, and he
is a former senior apple designer, and i asked how people se this app. >> people share stories made up f photos, videos, and text together. we realized there was an opportunity where people wanted to tell stories that went beyond a single photo, but they did not want to necessarily write a blog post. they can lay videos and photos out in an extended way. > is it like imovie? >> it allows it to make some thing that is more of a magazine article, but it allows video which adds a multimedia element. >> interesting. the ipad sales are dropping. is that a concern? are you going to expand? >> we're looking to move to the other platforms. we are very bullish on the ipad still and think it is a great device. ou look at the younger generation, we are hopeful that this is a device that will
change a lot and open up creation for a lot of people. >> you had a unique experience because you're at apple for eight years and you were a designer, and you are also a user experience evangelist, which means you helped other companies design apps for ios. >> correct. i tried to help people take advantage of the apple technology and unique hardware to push the boundaries of software design. that is what we try to do at storehouse, think about what publishing could be on an ipad. think about the large touch screen and the fast graphics. >> people are using this in a unique way. >> we're seeing it in everything from a girls night out, a collage of photos there, but also weekend backpacking trips. some of the more interesting cases have been the way professionals have adopted it. everything from an award-winning photojournalist using it to document and arctic expedition, all the way to cooking recipes.
that has been the most exciting part, seeing the variety of stories that have been told on the platform so far. >> what do you think about ios 8? >> i am pretty excited. i think ios 8 follows up and gives a lot of polish that might not have been there for ios 7. i'm hopeful that things are going to get better. >> you think the coolest features are not there yet. what are those? >> the developers conference focuses behind the scenes, so we have not seen the big unveiling of products from the consumer standpoint. we have talked about wearables and other exciting things. i am always hopeful and excited about it. >> there has been a lot of talk about the state of innovation at apple. how optimistic are you that they have still got some more world changing products in them that are coming soon?
>> i am very optimistic or die have spoken to a lot of friends are very excited. they are very quiet which means they're working hard on a bunch of different things. >> how are you going to spend the $7 million storehouse recently raised? >> we will get the team build, more engineers and designers, and we will expand beyond the ipad. we want to get to the phone and do a lot more on the web. >> who are your main competitors? >> there's not a lot of folks working on the photo story. people are talking about for writers and the web, we do not see many apps doing the same thing on iphone and ipad. >> storehouse ceo mark kawano here next, the senior vice president at oracle talks about his second love in life, setting off fireworks. he has his own fireworks factory. we meet him, next. ♪
>> welcome back. i'm emily chang. the world cup has proven to be a ratings success. the first to try usa games were so popular on espn's live stream that they caused service disruptions. why are americans so into the world cup this year? we spoke with the ceo of surveymonkey for the shakedown. i asked dave, who has been to three world cups himself, what is so special about this year and why so many people are watching. >> people are watching, but the survey says that soccer is seeing more interest. it is actually ahead of golf now in what people say they are watching online.
that might he skewed by the fact that we asking during the middle of the world cup. golf is definitely on the decline in general, and soccer is on the rise. it has a long way to go before it catches football and basketball. >> there has been a huge spike in viewership compared to four years ago. >> and every world cup has sort of scene that. the numbers have kind of blown people away. it goes to show, i think, and this is not in the survey results, but we see all the passion and soccer and that excites americans. i do not know if it is quite that for people. that is part of the issue. we saw the soccer fans tend to watch more online. still, it is a very small amount. i think that is because they have to go find the manchester united game streaming early in
the morning or something like that. they have to go search for it. >> i just got a number from nielsen on the ratings. 3.2 million on english speaking networks. 2.2 million in 2010. an 86% increase. >> there is more streaming because the games are on during the day. it is not just the technology. it is the fact that i am at work -- >> we are all trying to figure out how we are going to watch it today. >> in the car on way home are on my tablet. i think we still found that most people watch sports on tv and people watch it live. sports is on an night and during the weekends and your home. it is easier. music about your device. it is long -- you think about your device. it is longform. it is a lot of battery and data usage.
it is not mainstream. >> that was the surveymonkey ceo with cory johnson. while most of us only think about fireworks on the fourth of july, some people are thinking about them all year long. by day he is the senior vice president of hardware and software development at racle. by night, he is in his homemade fireworks factory in the middle of the arizona desert. he has curated some of the biggest fireworks displays in the country, even designing a special show for his boss larry ellison over the san francisco bay. look at this unusual hobby. >> i am senior vice president of hardware and software development at oracle corporation. when i'm not it there, people can often find me out here in the desert making fireworks, blowing things up. i started making fireworks when i was just a kid. of course when you are 12, you
cannot be serious about making fireworks because nobody will let you. as i got older, i could afford that are equipment and chemicals, the raw ingredients to make fireworks. there is a lot of parallel when developing a product and developing something people like to see in the sky. audiences expect particular things. they like loud noises and different kinds of textures and sometimes different intensity. they like a lot of things going n at one time. when i explain to people that i make fireworks, they immediately assume that i am nuts. it is probably true -- it takes a lot of courage. they are dangerous, high energy. one of the things that is fascinating to me is that it is a blend of art, chemistry, engineering, physics. it is that energy that you are able to control long enough for a short amount of time to make something very pretty out of something that is very powerful.
i think most people like watching fireworks. it is kind of universal. some people actually get emotional. i get very emotional. if you take really good music and a very artful display, it does something. it really affects me. i like to see what i build and what i do in the sky have the same effect on others. >> that was the oracle senior vice president of hardware and software development. that does it for the best of "bloomberg west." you can catch us monday through friday at 1:00 and 6:00 p.m. eastern times. 10:00 a.m. and 3:00 p.m. pacific. we will see you next week. ♪
>> what do an nba mvp, a wounded warrior, and your grandparents have in common? an invention designed to help them walk and run with greater ease and heal from injuries more quickly. how does it work? by taking gravity out of the equation. this is alterg. welcome to bloomberg "enterprise," your exclusive look inside america's most interesting, fast-growing businesses. the alterg treadmill does not look that different from other equipment you see in your average gym, but the technology behind it is far more complex, enabling the user to reduce the gravity load of their body weight by up to 80%, reducing impact and cse